Wednesday, July 30, 2008

Democracy is not doing India any favors

I have just returned from a short business trip to India. The visit took me to New Delhi and Chennai and my overall impressions of India admittedly based on a short stay are summarized below.

My first conclusion is that India’s public sector is as dismal as ever. Multi-laned highways were littered with pinch points due to ongoing construction, incomplete exchanges necessitating u-turns instead of direct turns. Industrial parks consisted of buildings that sat in midst of dirt fields strewn with piles of rubble, networked by unpaved, pot-holed roads. While visiting factories in these zones, we experienced periodic brown outs at a frequency of several per hour. Whether in the city or outside, the roads in India were lined with tin shacks and mud brick hovels. There was no conceivable way the streets could be kept clean and dust under control.

Because of the ineffectual government, India is a land of bottlenecks. On the first morning in Delhi, our host picked us up to take to his plant located in the industrial park west of New Delhi. As we approach the toll station, his driver took the extreme inside lane because his car was equipped with “fast pass,” the electronic way of paying toll. We quickly came to a crawl in the “fast” lane for more than 30 minutes while the slow, cash only lanes, moved passed us in steady streams. We were stuck in the fast lane because we were trapped by three lanes next to us; all using the moving “slow” lanes to cut in front of us in order to get through the electronic gates.

It was hard to know the original cause of the jam at the toll gates but having fast lanes moving much slower than the slow lanes sort of epitomized the way things work in India. At airport security, for instance, there was either more carry-on inspection capacity than there were passenger inspection or vice versa so that the lines never moved smoothly the way it should.

In contrast, the private sector is impressive. We met two companies vastly different in size but share certain common traits. They were resourceful, competent from top to bottom and knew how to get things done promptly. They understood the importance of making a consistently high quality produce, necessary to be preferred supplier to Japanese and Korean car makers. They found ways to be successful despite the hindrance of a bumbling government system.

Both companies were founded by leaders that were visionary and knew how to treat their employees and thus earn their loyalty. They enjoyed low turnover and can boast of core group of executives that have been with them for decades or more. Their core teams consisted of home grown talent that were very content to grow with their owners. These folks were not going to be easily lured by MNCs and others that set up in their neighborhood.

Despite the imagery of the rule of a caste system in India, I was impressed with the people in India. While driving in Delhi, I saw someone trying to jump on to a moving bus, missed and fell to the payment. The inert form was immediately surrounded by passers-by trying to figure out how to help him. In the brief moment that our car was passing the scene, I could see a genuine and spontaneous reaction of care and concern from total strangers on the street.

While in India, the front page of the newspapers reported on the imminent demise of the current ruling coalition and speculated on the make-up of the next coalition. The news was rife with rumors of how each small party was maneuvering for concessions as price of their potential swing votes. There were so much of these articles about so many of these minority political parties, it was too dizzying for a foreign visitor to follow. A week later, I found out that the current ruling coalition squeaked by with a slender majority, but not before getting temporary releases for jailed parliament members so that they can cast their votes. These were members currently serving terms in prison for murder or extortion.

When and if India’s public sector can get their act together and become the other essential leg of India’s economic machine, India will then truly become a power to reckon with. Until then, all the effusive praise of India as a model of democracy is simply a reflection of ignorance, a projection of blissful optimism not supported by reality.

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About George Koo

George came to the U.S. as a child from China, grew up in Seattle and educated at MIT, Stevens Institute and Santa Clara Univ.
Dr. Koo has recently retired from a world leading advisory services firm where he advised clients on their China strategies and business operations. He is founder and former managing director of International Strategic Alliances.
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Dr. Koo is a frequent speaker in various public forums on China and U.S. China bilateral relations. He writes for Pacific News Service (New America Media) on issues relating to Chinese Americans and to U.S.-China relations.
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